How do you position trade

Discussion in 'Professional Trading' started by FastandFurious, Sep 12, 2006.

  1. Open book is crucial for following order flow, particularly because you can see orders come in at the inside and watch if they get posted or printed. Further from the inside it's less valuable, but it can still give vague indications of levels where buyers and sellers get active (but I think the chart and past price action is better).

    I would stay away from the MACD histogram for a while, although it can be a good secondary tool once you thoroughly understand WHY it works (MA divergence/crossovers are not for all markets).

    Most money made by traders comes from a few trades that just go ballistic. You need to be able to know HOW to let your winners run in order to understand when those times arise. Scalping is good for teaching you how to execute quickly, but quick execution is only good for cutting losses and occasionally for locking in profits in volatile markets. Never for cutting winners down to a few cents.

    Position trading is usually defined as much longer holding times, over weeks or months, so that's not really what you're looking for. What would help in your situation now is slowly learning, not executing, and trading consistently on small size until it starts to make sense without screwing with your head.

    I can't describe my trading style because it's hard to explain, as it's discretionary (and don't let the systems guys tell you discretionary is inferior). I use a few indicators, the best ones are a weird fit and I don't talk about them much, but it's not crucial to have indicators. It began with building a large foundation of knowledge about price action and economic/sector/market data, THEN beginning to build on it with execution plans, THEN internalizing how different techniques need to be deployed in different market situations.

    The most important thing to learn is to always know where your exit is, always know how to size your position to reflect a consistent amount of risk (1-2% of your account maybe, depending on your # of trades and activity), and how to take advantage of real winners that will end up being 10-15 times what you risk. If you don't know where your exit is, how many cents to risk in the particular situation, and WHY you're taking the position, you should not be in the trade.

    All that will come from spending time studying charts endlessly every night, reading about techniques of other successful traders here (and there are some good guys around), and slowly putting it together while plugging away every day with little bits of size until the lightbulb clicks.
     
    #11     Sep 13, 2006
  2. narballs

    narballs

    Take a look at WLT. Daily chart showed it hitting 55.

    Once it hit 55 notice it rallied up on low volume. I drew a line from the first support at 60, next at 55, then 50. I shorted at 55, just covered at 50.

    Great example for long term.
     
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    #12     Sep 13, 2006
  3. Problem is he's stuck at a chop shop though, which restrict their traders to day only (for good reason, since they don't teach them anything).
     
    #13     Sep 13, 2006
  4. TRADERBM

    TRADERBM

    I am a big proponent of risk managment. I think a lot of new traders would benefit from defining their risk managment rules and sticking to them completely.

    Easier said then done , I know.
     
    #14     Sep 13, 2006
  5. narballs

    narballs

    chop shop?
     
    #15     Sep 13, 2006
  6. TRADERBM

    TRADERBM

    How is he stuck? Cant' he just leave with his capital?
     
    #16     Sep 13, 2006
  7. Of course, although he probably is locked into a non-compete contract that bars him from trading at another firm for a year or two. Standard practice for a few notorious firms in the NYC and Chicago area. Different strategy than Genesis, Echo, Benchmarq (from what I hear from traders there) who don't actively recruit and just focus on providing a service: competitive rates, good support, well managed leverage, and solid software. Or Bright, which has solid training.

    They're not illegal, and they can be excellent if you figure out a way to get outside of their commission tricks or are an experienced trader. But they make a good chunk of their cash by running on a deceptive business model designed to take 5k deposits from new trainees or use them as free labor.
     
    #17     Sep 13, 2006
  8. if u have a basic scanner look for stocks that are affected by some kinda news, usually upgrade/downgrade/m&a/report. u should find 'em under most acitves and most up/down [even better parameters, if the scanner got it, are top trade rate/top trade count] check how they move in premkt and how much interest there is in pushin' direction. wait for the open and study beahvior, if u see a trend in the makin' jump in at the base and let your pos run 'till trend exhaustion; if the opportunity to reverse arise [it often happens] take it. the first hour is the most profitable and offer best r/r for initiaitin' your pos. also last hour is good enough...most of the sold off/heavely bot stocks reverse at that time and u can grab a quick 1-2%. observe a lot, it's more important than takin' chances at the beginnin'.
     
    #18     Sep 13, 2006
  9. TRADERBM

    TRADERBM



    Isnt a non compete difficult to enforce? It doesnt seem right that you can not trade somewhere else for 2 yrs if you are unhappy with the firm you just joined.
     
    #19     Sep 13, 2006
  10. TRADERBM

    TRADERBM

    I too like to trade the first hour. The conditions are most favorable.

    I trade mostly NYSE. I wait for the morning pull back and wait for a break out pattern to emerge. As soon as I get confirmation, I will buy shares to test it. If I'm in the money, I'll add to my position accordingly.
     
    #20     Sep 13, 2006